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By Stephen Mwaura Nduati Central Bank of Kenya

Southern Africa Roundtable on Making Finance work for Africa May 7-9, Zambezi Sun Hotel, Livingstone, Zambia Finance and Technology – What are the opportunities?. By Stephen Mwaura Nduati Central Bank of Kenya . Introduction. Access Challenges:

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By Stephen Mwaura Nduati Central Bank of Kenya

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  1. Southern Africa Roundtable on Making Finance work for AfricaMay 7-9, Zambezi Sun Hotel, Livingstone, ZambiaFinance and Technology – What are the opportunities? By Stephen Mwaura Nduati Central Bank of Kenya

  2. Introduction • Access Challenges: • Financial Services – Kenya, Tanzania, Zambia, South Africa • Mobile Telephones - Kenya • Growth in Bank Branches and in ATM Services - Kenya • Local Money Transfer Services – Kenya • Enabling Environment for Mobile Banking • Regional Payment System Initiatives • Way forward Enabling Environment for Mobile Banking in Africa

  3. Access to Financial Services - Kenya Source - National Survey on Access to Financial Services in Kenya 2007 Enabling Environment for Mobile Banking in Africa

  4. Access to Financial Services – Tanzania Source – Finscope: Key findings of the finscope survey in Tanzania 2006 Enabling Environment for Mobile Banking in Africa

  5. Access to Financial Services - Zambia Source – Finscope: measuring financial access in Zambia November 2006 Enabling Environment for Mobile Banking in Africa

  6. Access to Financial Services – South Africa Source – FinMark Trust: Making financial markets work for the poor (2006) Enabling Environment for Mobile Banking in Africa

  7. Growth in Bank Branches - Kenya ATM Growth - Kenya Source: Central Bank of Kenya Enabling Environment for Mobile Banking in Africa

  8. Local Money Transfer Services - Kenya Source - National Survey on Access to Financial Services in Kenya 2007 Enabling Environment for Mobile Banking in Africa

  9. Access to Mobile Telephones - Kenya Source - National Survey on Access to Financial Services in Kenya 2007 Enabling Environment for Mobile Banking in Africa

  10. Enabling Environment for Mobile Banking • What is m-payment and m-banking? • Why is m-payments and m-banking relevant? • Emerging experiences & models • Policy Framework • Possible roles for policy makers • Enabling environment policy balance • Key concerns (certainty, security issues, competition) Enabling Environment for Mobile Banking in Africa

  11. Form of money: Cash e-money Bank money e-money institution (could be bank or Telco) Issued by/liability of: Central Bank Commercial bank POS/ATM Digital cash Smart card Channel: Physical exchange Mag stripe card Mobile phone Internet Branch & cheque What is m-payments and m-banking? Account based or digital wallet Enabling Environment for Mobile Banking in Africa Source – Bankable Frontier Association

  12. Enabling Environment for Mobile Banking in Africa

  13. Which model? Traditionally, bank driven (linked to deposit account or credit card) Telco driven (linked to pre-paid account) Enabling Environment for Mobile Banking in Africa Source: Mobey Forum WP v1.1

  14. Why is m-payments and m-banking especially relevant? • Broadens access to financial services: • Unbanked with cell phone: SA 20%+ • Rural coverage and penetration increasing • Leapfrogging access to e-banking • Focal point to assess and consider general development issues in the retail banking system • Enhancement of safety, security & efficiency • Positive impact on social & economic growth Enabling Environment for Mobile Banking in Africa

  15. Emerging Experiences & models • Europe: • Collapse of Simpay & other models • Nordic region most advanced • Asia: • Japan: • DoCoMo: FeliCa 10m by end 2005 • Korea: • 10m enrolled from 2003 onwards • Philippines • SMARTmoney: 2.5m/ 20m customers (2000) • Globe G-Cash: 1.2m (2004) Enabling Environment for Mobile Banking in Africa Source – Bankable Frontier Associates

  16. Zambia & DRC Celpay: 2002 onwards South Africa: MTN Mobile Banking: 2005- Wizzit: 2005- Paym8: 2003- Kenya: M-Pesa: 2007 launched Africa today: Enabling Environment for Mobile Banking in Africa Source – Bankable Frontier Associates

  17. E-commerce AML-CFT Bank Agency Payment systems Comp-etition Telco regulation Bank outsourcing Policy Framework EE: MOBILE PAYMENTS & MOBILE BANKING Enabling Environment for Mobile Banking in Africa

  18. Key Concerns - Certainty There should be sufficient certainty around electronic contracting to protect both parties Issues: • Repudiation risk • UNCITRAL model laws • Advanced digital signatures Enabling Environment for Mobile Banking in Africa

  19. Competition “The consumer should have the freedom to choose bank, mobile operator and handset and change them independently” Mobey Forum White Paper 2003, Customer Proposition Issues: • Number portability • Platform access • Movilpago case (Spain, 2000) Enabling Environment for Mobile Banking in Africa

  20. Possible roles for policy makers • Regulator • Supervisor • Standard setter • Information gatherer • Facilitator • Coordinator Enabling Environment for Mobile Banking in Africa

  21. Stability of the financial system Efficiency Financial integrity Broader access Consumer protection & choice Enabling environment:Policy balance Enabling Environment for Mobile Banking in Africa

  22. Market development Questions for policy makers/ regulators 1. Should policy makers promote inter-operability (to get to efficiency and critical mass)? The gains from doing so could be offset by diminished product differentiation and stifled innovation. 2. Should public authorities be involved in the security of the means of payment? There are commercial incentives to achieve this, but also market wide externalities from not achieving it. Source: Helen Allen, Bank of England 2003 No of consumers 1. Pioneer 2. Breakout 3. Consolidation 4. Maturity Enabling Environment for Mobile Banking in Africa

  23. Regional Payment and Settlement Systems Initiatives • Enhance regional financial stability and promotion of regional economic development through – East African Payment System Harmonization Committee and MAC directives on: • Cross Border Settlement model for the region • Harmonization of oversight benchmarks • Internet payments, e-commerce and e-banking • BIS guidelines on Risk Management principles for e-banking • Management and supervision of Cross Border e-banking activities Enabling Environment for Mobile Banking in Africa

  24. Way Forward • Way forward: • Appreciation that the payment system will remain dynamic – • New opportunities, • Market requirements and • Technological developments • Enactment of e-legislation [e-transactions, communications & information] • Enactment of AML and CFT Legislation • Enactment of Modern Payment System Legislation (Large Value payment systems (RTGS), Retail payment system) • Enhancement of Regulatory Capacity to ensure that safety and efficiency are maintained and that the following Questions are continuously addressed:- • Why Regulate? • How? • When? Enabling Environment for Mobile Banking in Africa

  25. Are we ready for the transformation? Enabling Environment for Mobile Banking in Africa

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